REDENOMINATION OF GOVERNMENT SECURITIES IN EURO

Tolar denominated government securities will be redenominated to Euro using the bottom up method. The method chosen converts a single note into Euro, using the SIT/Euro fixed conversion rate (i.e. 239,64 SIT for 1 Euro) and  rounding to the nearest cent.

There are several bonds in the government securities portfolio which are denominated in EUR, but payments are effected in SIT countervalue.  This type of bonds will not need to be redenominated. From January 1, 2007  all payments of these bonds wil be calculated and effected in Euro. 

On December 31, 2006, the following eurodenominated bonds with fixed rate of interest will be outstanding: RS4, RS18, RS23, RS26, RS29, RS32, RS33, RS38, RS48, RS49, RS50 in RS53.

The nominal value of these bonds is 100 EUR except for RS4 which has the nominal value of 511,29 EUR and RS49 which has the nominal value of  380 EUR.

Nominal value of the bond is paid in a lump sum on the day of amortization of the bond. On December 31, 2006, the following fixed rate SIT bonds will be outstanding: RS44, RS52, RS54, RS55, RS56, RS57, RS58, RS59, RS60, RS61 in RS62. The denomination of these bonds is 10.000 SIT.

On Conversion day, the  value of a single bond in Euro is established using the redenomination  method as described above. From January 1, 2007 onwards this value (i.e. EUR 41,73)  will be the new nominal value of the bond and the basis for caluculation of interests according to the terms and conditions of the bond. 

are instruments where the nominal value of the bond is being revalued for the current  annual TOM rate (base interest rate equal to preceeding 12 months average inflation).  The nominal value of the bond is revalued using the compound calculation method, i.e. by multiplying the nominal value of the bond with revaluation factors, calculated  monthly on the basis of TOM rate. These instruments have a fixed rate of interest. The revalued principal of the bond  is paid in a lump sum on the day of maturity. On December 31, 2006, two bonds of this type will be outstanding:  RS46 and RS47.

On Conversion day, nominal SIT value  (10.000 SIT) of  each such note will be redenominated in Euro using the redenomination principle as described above (EUR 41,73). At the time of each interest payment this Euro redenominated value will be revalued  as described in the preceeding paragraph and the interest will be calculated on  such value of the bond and paid in Euro.  On the due date of principal of the bond the bond will be repaid in the revalued  nominal value calculated on the repayment date  as described in the previous paragraph.

are government securities with variable rate of interest which consists of current annual base rate of interest and a fixed  interest margin. (TOM + X%). The greater part of these bonds will be amortized before Euro introduction. However, on December 31, 2006, three bonds remain unamortized (outstanding): RS21, RS31 in RS39.

On Conversion day, value of a the RS31 bond in Euro is established using the redenomination  principle as described above. From January 1, 2007 onwards this value (i.e. 41,73 EUR) will be the new nominal value of the note and the basis for caluculation of interests according to the terms and conditons of the bond.

On Conversion day, the value of outstanding instalments of principal  of RS21 and RS39 amortizing  bonds in Euro is established using the fixed conversion rate rounding to one cent.. The  difference between total value of the redenominated outstanding  principal and the sum of redenominated outstanding instalments will be added to the first instalment to be paid after December 31, 2006.